Jan. 13 (Bloomberg) -- Power Assets Holdings Ltd.,
controlled by Asia’s richest man Li Ka-shing, reduced the size
of an initial public offering of HK Electric Investments and
will sell almost a fifth of the electricity supplier to State
Grid Corp. of China.

Power Assets will raise as much as HK$27.9 billion ($3.6
billion) selling HK Electric units at HK$5.45 to HK$6.30 apiece,
it said in a statement yesterday. The company is offering a 50.1
percent stake in HK Electric, after previously saying it planned
to sell as much as 70 percent of Hong Kong second-largest power
supplier.

Power Assets is set to complete the world’s biggest trust
IPO in almost three years as growth slows in Hong Kong, where Li
has been selling assets. The price range implies an estimated
2014 dividend yield of 6.26 percent to 7.24 percent for HK
Electric, Power Assets said.

“You can make the argument that there’s very little growth
opportunity in Hong Kong,” said Michael Parker, a Hong Kong-based analyst at Sanford C. Bernstein & Co. “The relationship
between the regulators and utilities has not been positive for
the last few years.”

State Grid, China’s biggest power distributor, agreed to
invest as much as HK$10 billion for an 18 percent stake in the
unit, according to the statement. Oman Investment Fund also
agreed to buy a stake for HK$387.5 million. Power Assets will
hold 49.9 percent of the unit after the offering, it said
yesterday.

Share Slump

HKT Trust, the owner of Hong Kong’s biggest
telecommunications carrier, trades at an estimated 2014 yield of
6 percent, according to data compiled by Bloomberg. Champion
REIT, which owns commercial property in the city, trades at a
5.4 percent estimated 2014 yield, the data show.

HK Electric will have a market value of HK$48.2 million to
HK$55.7 billion, Power Assets said.

Hutchison Port Holdings Trust, also controlled by Li,
raised $5.5 billion through a Singapore IPO in March 2011,
according to data compiled by Bloomberg. The trust has fallen 33
percent from its offer price. Hui Xian Real Estate Investment
Trust, which was spun off from Li’s Cheung Kong Holdings Ltd.,
has slumped 27 percent since a March 2011 IPO that raised $1.8
billion.

Power Assets shares have fallen 9.3 percent in the past
year, in line with the 7.2 percent decline for CLP Holdings
Ltd., Hong Kong’s biggest electricity provider. The benchmark
Hang Seng Index has slid 2 percent over the period.

Overseas Assets

Li, 85, has a net worth of $29.6 billion, according to the
Bloomberg Billionaires Index. Goldman Sachs Group Inc. and HSBC
Holdings Plc are joint sponsors for the HK Electric listing,
Power Assets said Dec. 15.

Under Hong Kong government rules introduced in October 2008
to curb electricity charges, the rate of return on fixed-asset
spending by power generators was cut to 9.99 percent from
between 13.5 percent and 15 percent. To offset the reduced
returns, CLP and Power Assets have sought acquisitions in Europe
and other parts of Asia.

HK Electric, which started operations in 1890, provides
electricity to about 568,000 customers, according to a pre-listing filing on Jan. 5.

Outside of Hong Kong, Power Assets has interests in assets
from gas distribution to wind farms in the U.K., Australia,
China, New Zealand, Thailand, Canada and the Netherlands, the
company said in a statement on Sept. 27. Earnings from
businesses outside Hong Kong surged from HK$700 million in 2007
to HK$5.1 billion in 2012 and accounted for more than half of
the company’s profit that year, Power Assets said.

Power Assets has partnered with other companies controlled
by Li to acquire assets in Europe. In June, a group of Li
companies including Power Assets agreed to buy Dutch waste
processor AVR Afvalverwerking BV for 943.7 million euros ($1.3
billion).